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Economics Essays

A balance of payments deficit is when a country spends more on imports than it earns from exports.One possible policy could be to increase spending on education and training. This will increase the quality of goods and services produced in Britain, which would increase the value of exports. There are however time lags involved as it would be a while before the affected students advance through school and reach the workforce.Another policy is to introduce tariffs on imported goods. This makes them more expensive so less will be bought, reducing imports. However this may backfire if other countries retaliate by placing tariffs on goods from Britain, which would in turn reduce British exports.Overall, spending on education is likely to be the better policy. Although it takes a while to come into effect it cannot result in trade wars. It will instead result in a better educated population, giving wide ranging benefits including better productivity.